Next Generation Consoles

The three major players, Microsoft, Nintendo and Sony have all had very successful product launches with the XBox 360, Wii and PS3 respectively. With continual developments across the semi-conductor world giving us faster processors and better graphics capability, a more tech-savvy consumer and tech world that isn’t so “black art”, it seems that we’re fast approaching a need to level up (pun intended) for all three console manufacturers.

Microsoft’s Games

The XBox 360 has had reasonable market share, with many exclusives and “first to appear” games such as Halo and Burnout Paradise. Despite having a well reputed games catalogue, the XBox 360 has struggled to make gains on its’ competitors until recently.

The game changer has been the launch of the Kinect product – a controller-less controller. This has been a real differentiator with Microsoft shifting over 10 million Kinects units worldwide up to Q1 2011 (source: Microsoft). But in launching a product add-on, it also means they would want to avoid alienating those consumers who may have recently purchased either/both the 360 and/or Kinect shoudl they launch a new console.

Sony’s Technical Capability

From a technical capability, Sony should have had the advantage on its’ competitors; their product meant not only should the PS3 appeal to the consumer looking for a Bluray player (as the unit price was reasonably comparable), but also the games should be able to perform at blistering parallel processing speeds vs say, Microsoft’s traditional multi-core CPU architecture.

Despite that potential, Sony failed to capitalize on their edge and have been jostling with Microsoft for second place for unit sales (Wii being, until recently in first place). The recent introduction of their Move controller, which is more similar to the Wii’s nun chuck, has had admirable sales results, shifting 4.1m units in the first 2 months after launch (source: Joystiq)

Nintendo’s Marketing

Nintendo decided to approach their console market slightly differently; although the Wii is not HD capable and doesn’t play DVDs it did introduce the nun chuck controller which neither Microsoft or Sony had (until their own updates Q4 2010). They also created a simple user experience, both in the user interface of their onscreen dashboard, but also with the controller.

Combine this with a suite of games designed to appeal to all ages, the addition of “Wii Fit” and a price point lower than either of its’ two competitors meant that it took an early market lead and until only recently continued to dominate unit sales.

The Landscape Today

Research from video game tracking firm Strategy Analytics’ Connected Home Devices service, has been trending the spread of market share: Senior analyst, Jia Wu said “Microsoft’s Kinect was clearly one of the winners in 2010…In the second half of 2010, the Xbox 360’s market share for the first time exceeded the 30% mark among the current generation fixed consoles, which was clearly driven by the Kinect launch.” (source: Hollywood reporter).

Console Next Gen

Where does this put all three manufacturers on a timeline? I’ve put my gypsy cloth and crystal ball out to make a stab at where things are.

This is just a guess right now, but I do know that both Sony and Microsoft have made assertions that their products have plenty of life left – notwithstanding the significant development costs ploughed into them (source: Kotaku , GamerBlorge et al). Conversely, with the lower development and production costs for the Wii, there are rumours surfacing that their next-gen Wii (we’ll call it WiiHD) will be announced at E3 2011 (source: Slashgear).

In all three cases, backward support for current-gen console games will be expected by consumers.

I believe Microsoft will also have some “home integration” into the mix; they seem to want to be as integral as a television, making their product just a natural extension of said television. Perhaps this means integration with major content providers to provide services like DVR, linking up lighting, alarm systems, connection to other smart devices (e.g. smart fridges). Having a controllerless controller means no searching around for the remote, or finding that the battery is out of power. This could be the differentiator which brings Microsoft to the forefront… however I wouldn’t discount Sony from not getting in on the action either.

Update, April 21st

Looks like the new Wii will have a display in the controller if rumours are to be believed: